Will I Be Able to Afford Retirement After a Gray Divorce?

 Posted on February 21, 2025 in Divorce

Divorce is always a major life change, but when it happens later in life, the financial impact can be even more profound. After decades of shared financial planning and splitting assets, adjusting to a single income can be daunting. Will your savings last? Will you need to downsize or delay retirement? These are among the common concerns for those navigating a gray divorce. Fortunately, you can take control of your future with strategic financial planning and the guidance of an Illinois gray divorce lawyer. 

How Does Divorce Affect Retirement Savings?

Retirement accounts are often among the most valuable assets that can be divided in a divorce. According to Illinois law, retirement savings acquired during the marriage are considered marital property and are subject to equitable distribution. This means that instead of being split evenly, they are divided based on what is fair, considering factors like each spouse’s income, earning potential, and financial need.

If your divorce settlement includes a portion of your spouse’s retirement savings, you may need a Qualified Domestic Relations Order (QDRO) to divide employer-sponsored retirement accounts without tax penalties. 

What Are My Sources of Retirement Income After Divorce?

After a divorce, you may need to rely on multiple sources of income to maintain financial stability. Common sources of retirement income include:

• Social Security Benefits: If you were married for at least 10 years, you may be eligible for this based on your ex-spouse’s work history. Doing so does not affect his or her benefits.

• Pension and Retirement Accounts: If your spouse had a pension or 401(k), a portion of it may be awarded to you in the divorce settlement. 

• Spousal Maintenance: Illinois courts may grant spousal maintenance based on factors like the length of the marriage, each spouse’s income, and financial needs.

• Investment Income: Stocks, bonds, and rental properties can provide additional income. If you receive investment assets in the divorce, it may be beneficial to consider how you can manage them for long-term financial stability.

How Can I Adjust My Budget After Divorce?

Creating a new budget after divorce is essential for financial longevity. Some key strategies to maintain this security include:

• Downsizing: To reduce housing costs, consider selling a large home in favor of a smaller, more affordable property.

• Reducing Expenses: It can be helpful to cut back on non-essential spending, such as luxury purchases, dining out, and subscriptions.

• Reevaluating Retirement Goals: You may need to modify your expected retirement age or consider working part-time to supplement your income.

• Building Long-Term Savings: Even after divorce, it is important to keep saving for future expenses like healthcare and unexpected costs.

What Long-Term Financial Steps Should I Take?

To secure your financial future, consider meeting with a financial planner who can help you create a realistic retirement strategy. Updating your estate plan is also essential, as your will, power of attorney, and beneficiary designations should reflect your new financial situation.

Healthcare costs should be another priority. To help protect against unexpected medical expenses, you may want to look into long-term care insurance or supplemental Medicare coverage.

Contact a Kane County, IL Gray Divorce Lawyer

Gray divorce can disrupt financial plans, but with the right approach, retirement can still be affordable. A knowledgeable St. Charles, IL divorce attorney at Divorce Over 50 - Goostree Law Group can help protect your assets and secure a fair property division. Contact us at 630-634-5050 to discuss your options and create a plan for long-term financial stability.